All Registered Investments Advisory firms are required to preserve all SEC or state-mandated business records and follow general recordkeeping and supervision requirements. How well are you following the regulations set forth by the SEC and State in regards to recordkeeping and supervision? How do you define an advertisement, and what are the guidelines on using social media?

1. MAY 2015
Chad Hartwick, Director of Post-Registration Compliance,
Lexington Compliance
Mike Pagani, Sr. Director of Product Marketing, Smarsh
Regulatory Landscape:
Recordkeeping, Advertising, and Social Media
www.smarsh.com www.riainabox.com

2. Disclosures
• Lexington Compliance and RIA in a Box are not law firms, CPA firms, or registered investment advisory firms.
• None of the information presented, advice given, or services rendered should be considered legal, tax, accounting, or
investment advice.
• If you require the services of an attorney, we recommend that you seek out an independent attorney and verify their
securities law experience.

3. What is an Advertisement?
SEC Rule 206(4)-1(b) defines an advertisement as any notice, circular, letter or other written communication addressed to more than one person, or any
notice or other announcement in any publication or by radio or television, which offers (1) any analysis, report, or publication concerning securities, or which
is to be used in making any determination as to when to buy or sell any security, or which security to buy or sell or (2) any graph chart or other device to be
used in making any determination as to when to buy or sell any security, or which security to buy or sell, or (3) any other investment advisory services with
regard to securities.
This includes Social Media!!!

4. Advertising Examples
• Television / Radio
• Form letter
• Yellow page ad
• Billboard sign
• Seminar
• Newsletters
• Brochures / pamphlets
• Newspaper ad
• Electronic forms / social media
• Websites
• Facebook
• LinkedIn
• Twitter
• Etc…….
** Not an all inclusive list **

5. Advertising Requirements
• Record keeping
• SEC Rule 204-2
• 5 years
• Electronic storage permitted (204-2(g))
• Content standards – 5 tenets
• Policies and procedures
• Procedures to keep records
• Procedures to review and approve content
• Procedures specifically addressing the use of Social Media

6. 5 Tenets of Advertising
It shall constitute a fraudulent, deceptive, or manipulative act, practice, or course of business within the meaning
of section 206(4) of the Act for any investment adviser registered or required to be registered, directly or
indirectly, to publish, circulate, or distribute any advertisement:
• Which refers directly or indirectly, to any testimonial
• Which refers directly or indirectly, to past specific recommendations of such investment adviser which were
or would have been profitable to any person. Provided, however…….
• Which represents, directly or indirectly, that any graph, chart, formula or other device can be used in
making investment decisions without specific disclosures.
• Which contains any statement to the effect that certain adviser services are free, unless true.
• Which contains any untrue statements of material fact or which are otherwise false or misleading.

7. Regulator Guidance on Social
Media
• SEC National Examination Risk Alert – OCIE – Investment Adviser Use of Social Media – Volume II, Issues 1 – January 4, 2012
• SEC Division of Investment Management – IM Guidance Update – Guidance on the Testimonial Rule and Social Media – March
2014
• Commonwealth of Massachusetts – Securities Division – Guidance on the Use of Social Media by Investment Advisers. –
January 18, 2012

8. • Use of Social Media communications is increasing rapidly
and growing in diversity too
• Archiving technology vendors have to keep pace with Social
Media expansion and constant innovation
• What to look for when selecting a solution – in the technology
itself and from the company standing behind it
8
Where do we go from here?

9. Trends in Social Media Comms
YOY Comparisons:
• Overall volume is up
• Diversity is expanding, notice
Vine is new
• Email volume % is down
• Twitter, WordPress and
Snapchat are way up
• Can you imagine the 2015
version of this?
9
2013
2014

10. Impact on Archiving Technology
• Architecture is STILL typically e-mail centric
• Social Media communications content is different and requires
specialized treatment
• The only standard is there isn’t one – each type has its own unique
attributes and nuances
10

11. Key Archiving Solution
Components
• Silos are bad – use ONE integrated PLATFORM for archiving all your digital communications and not just social media; API
for integration as well
• Retention of original message format to preserve proper context for search/review and to maintain proper forensic handling of
electronic evidence
• Should offer BOTH policy-driven supervision AND e-Discovery workflows
• Intuitive and efficient user and administration interfaces and processes
• An experienced, knowledgeable and reliable vendor for guidance who also offers added value professional services when
needed
11

12. Case Study
• Heron Financial Group is a New York-
based RIA effectively using social media
(LinkedIn, Facebook, Twitter, YouTube)
to enhance marketing efforts
• SEC mandates RIAs must retain and
review business records – including
social media.
• Heron relies on Smarsh technology for
efficient compliance workflows
12

13. 13
Summary/Final Thoughts
• Social Media is playing an increasingly important role in advertising for today’s RIA
• Balancing act: get the benefits of Social Media while staying compliant in the process
• Archiving technology solutions exist and are successfully being used in the real world

14. 14
Thank you…
Questions???